In the TSP for feds and in 401(k) plans in the private sector, it is important to watch out for excessive elective deferrals!
FedLife Podcast (ep. #115): The TSP and 401(k) Plans – Watch Out for Excess Elective Deferrals!
What happens when you contribute to the TSP and another qualified retirement plan like a 401(k) in the same year? Just remember the annual contribution limit applies to the individual, not the plan! If contribute too much – you’ll have to pay a penalty to the IRS.
Featured in this episode:
- Contributing to two qualified plans can lead to excess elective deferrals and steep tax penalties.
- Examining what happens when military personnel is on an active tour of duty.
- Contributions that are made from the federal employee’s salary – not the match!
- Codes D and A on your W2, reporting your compensation for a calendar year
- Situations where employees contribute to a 401k and the TSP – switching jobs or retiring.
- IRS Excess Contribution Penalty – 6% of the amount that was over the annual maximum
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